Business Sale, Succession & Transaction Tax Planning.
Business Sale, Succession & Transaction Tax Planning is a high-stakes consultative advisory service that structures mergers, acquisitions, equity sales, and generational business transfers to minimize the federal and state tax bite on transaction proceeds. Because gross sale price is a vanity metric—and after-tax net cash in your bank account is what actually matters—Alan Balmer, CPA models deal structures, negotiates purchase price allocations (IRC § 1060), and orchestrates pre-sale tax maneuvers before purchase agreements are executed. The outcome is the preservation of hundreds of thousands to millions of dollars in transaction equity that would otherwise be lost to ordinary income and capital gains taxes.
Critical Decision Triggers: When You Need Counsel.
Operating without proactive strategy risks unnecessary taxes, penalties, and audit friction. These are the specific turning points when engaging senior counsel changes your financial outcome.
You Received a Letter of Intent (LOI) or Term Sheet
An acquirer, private equity group, or competitor has presented a preliminary purchase offer, and you need to understand your true after-tax proceeds before signing.
Planning an Exit Within 12 to 36 Months
You plan to retire, recapitalize, or transition out of your business within 1 to 3 years and need sufficient runway to restructure entities, clean up balance sheets, and establish tax shelters.
The Buyer Demands an "Asset Sale"
The purchaser insists on buying assets (for a stepped-up depreciation basis), which threatens to trigger massive ordinary income tax and depreciation recapture for you.
Generational Succession Planning
You wish to transfer ownership and leadership of a family business to your children or key management teams without triggering catastrophic gift taxes, estate taxes, or cash flow crises.
Earnouts and Seller Financing on the Table
The deal includes contingent earnouts, seller notes, or rollover equity, requiring sophisticated installment sale structuring under IRC § 453.
Real-World Case Precedents
A North Texas specialty contractor received an unsolicited $4,200,000 buyout offer. The buyer’s initial draft allocated $2,400,000 to depreciated machinery and inventory—which would have triggered immediate ordinary income tax and depreciation recapture rates up to 37% for the seller. Alan stepped into the deal negotiations alongside legal counsel, restructuring the Section 1060 allocation toward goodwill, personal goodwill, and non-compete covenants. The adjustment transformed $1,300,000 from ordinary income into long-term capital gains, keeping over $240,000 in additional net cash in the founder’s pocket at closing.
An established Denton County manufacturing business valued at $6,500,000 was transitioning from founder to his two adult children. A straight sale would have created a crushing tax bill, while an outright gift would have exhausted federal lifetime gift exemptions. Alan engineered a multi-year succession plan utilizing a family limited partnership (FLP) with minority interest valuation discounts, combined with an installment note sale. The business transitioned smoothly, operational control was preserved, and gift tax liability was reduced to zero.
Texas & Multi-State Jurisdictional Scope
Tax outcomes depend not just on federal codes, but on how state statutes, residency tests, and cross-border apportionment rules intersect. Alan Balmer, CPA leverages decades of nationwide practice to construct defensive, multi-jurisdiction frameworks.
The Texas Capital Gains Advantage
Because Texas imposes zero state personal income tax, Texas business founders pay only federal capital gains tax (20% top rate + 3.8% Net Investment Income Tax) on sale proceeds, saving up to 13.3% compared to sellers in California or New York.
Texas Franchise Tax on Business Sales
While individuals pay no capital gains tax in Texas, corporate entity sales and asset transfers can trigger Texas Franchise Tax liabilities under gross margin sourcing rules. We structure transaction mechanics to legally minimize or eliminate state franchise tax impact.
Apportionment of Multi-State Business Assets
If your business maintains physical locations, inventory, or employees in other states, those jurisdictions will demand their share of transaction taxes. Alan coordinates multi-state asset apportionment to shield sale proceeds within Texas.
Decisions & Tradeoffs: Strategic Reality.
Every tax decision involves tradeoffs between cash liquidity, audit exposure, compliance complexity, and permanent tax savings.
| Transaction Structure | Impact on the Seller | Impact on the Buyer |
|---|---|---|
| Stock / Equity Sale | Ideal for Seller. Proceeds taxed at favorable long-term capital gains rates (20% + 3.8% NIIT). No depreciation recapture. | ✓ Buyer assumes all historical corporate liabilities and receives carryover asset basis (no step-up). Ideal when liabilities are clean. |
| Asset Sale | Risk for Seller. Subject to ordinary income tax on inventory, receivables, and equipment depreciation recapture. | ✓ Ideal for Buyer. Buyer avoids historical liabilities and gets a stepped-up tax basis to depreciate assets anew. |
| IRC § 338(h)(10) Election | Treated as an asset sale for tax purposes, but legally executed as a stock transfer. Seller pays tax on deemed asset sale. | ✓ Buyer gets full asset basis step-up without transferring individual contracts. Requires purchase price gross-up negotiation. |
| Installment Sale (IRC § 453) | Defers capital gains tax over multiple years as payments are collected, smoothing out high tax brackets. | ✓ Buyer funds transaction over time using company cash flow rather than expensive third-party bank debt. |
Who This Is For. And Who It Is Not For.
We maintain absolute alignment with our clients. Selective engagements ensure maximum focus, strategic depth, and high-value results.
Ideal Fit Criteria
- ✦ Owners of closely held businesses, S-Corps, LLCs, and C-Corps with anticipated transaction values between $1,000,000 and $25,000,000+.
- ✦ Sellers who have received an offer or LOI and need immediate, rigorous tax modeling before finalizing definitive purchase agreements.
- ✦ Business leaders preparing for an exit within 1–3 years who want to implement QSBS, entity reorganizations, or gift trusts before a formal valuation is set.
- ✦ Multi-generational business leaders planning an orderly, tax-efficient transfer of equity and operational control to children or key management teams.
Who This Is Not For
- — Founders who have already signed definitive purchase agreements and closed their transaction (deal structures cannot be retroactively altered).
- — Simple micro-business liquidations under $100,000 that do not justify specialized M&A tax advisory.
- — Anyone seeking to conceal liabilities, avoid legitimate creditors, or execute abusive tax avoidance shelters.
What Alan Balmer Delivers.
When you retain Alan Balmer, PC for Transaction Tax Planning, you receive clear, institutional-grade consultative deliverables:
Pre-Sale Net Proceeds & Tax Exposure Model
A rigorous comparative financial model detailing your exact estimated net cash in hand under Stock Sale, Asset Sale, and 338(h)(10) structures at various purchase prices.
IRC Section 1060 Purchase Price Allocation Schedule
Defensible asset class allocations (Cash, Receivables, Inventory, Equipment, Goodwill) designed to maximize capital gains treatment and minimize ordinary income.
Installment Sale & Earnout Structuring Blueprint
Specific contractual terms and payment schedules modeled under IRC § 453 to optimize interest rates, defer capital gains, and manage default risks.
Succession & Transfer Valuation Strategy Memo
For family transfers, a comprehensive transfer blueprint utilizing minority discounts, family LLCs, and grantor-retained trusts.
Collaboration with Legal & Deal Teams
Direct strategic coordination with your corporate attorneys and investment bankers, ensuring tax covenants in the Definitive Purchase Agreement (DPA) protect your net equity.
Tailored Scope for Your Situation
Have a unique transaction, multi-entity portfolio, or complex interstate requirement? Alan Balmer structures bespoke scopes designed around your exact capital timeline.
What the Client Must Provide
Elite tax strategy is a collaborative partnership. Defensible tax posture requires complete, timely operational records.
Draft LOI or Purchase Agreement
Full copies of any letters of intent, term sheets, or asset purchase agreements currently under consideration.
3 to 5 Years of Historical Financials
Audited or reviewed financial statements, federal returns (Form 1120-S, 1065, or 1120), and detailed fixed asset depreciation schedules.
Stock Basis & Capital Account History
Detailed records of initial equity contributions, prior distributions, and shareholder loan balances.
Transparent Exit Objectives
Complete clarity regarding post-closing plans—retirement, rollover equity, consulting agreements, or immediate capital redeployment.
The Engagement Process.
A disciplined, four-stage progression from preliminary mutual-fit review to finalized blueprint delivery.
Mutual Fit Consultation (Text or Email)
Contact Alan directly via text or email at 641.233.1036 or alan@alanbalmerpc.com. Consultations are complimentary and scheduled at Alan's discretion following an initial direct review to confirm mutual fit.
Deal Modeling & Tax Scenarios
We analyze the LOI terms, model your asset vs. stock tax consequences, and calculate your true net cash proceeds.
Purchase Price Allocation & Contractual Review
We collaborate with your legal deal counsel to negotiate the Form 8594 / Section 1060 asset allocation schedule and review tax indemnifications in the purchase agreement.
Closing Blueprint & Execution Directives
Alan delivers transaction-level tax directives, Form 8594 schedules, and installment gain guidance to ensure your tax preparers execute every post-closing election flawlessly.
Fee Structure & Models
- ✓ Engagement Models: Transaction tax planning is engaged on either a flat project fee (for deal modeling, purchase price allocation negotiation, and contract review) or a fixed annual or quarterly advisory retainer for extended pre-sale restructuring and succession engagements.
- ✓ Massive Value Multiplier: A single structural shift in asset allocation (e.g., shifting $500,000 from equipment recapture to enterprise goodwill) preserves more than $85,000 in cash at closing—yielding an exponential return on advisory fees.
- ✓ Finalized After Free Consultation: The exact project scope and fixed investment are finalized after a free, no-cost, no-obligation consultation with Alan Balmer, CPA.
Proof, Precedent & Experience
✦ Startups to Nine-Figure Exits
With 25+ years of senior practice experience, including founding and scaling an entrepreneurial accounting firm in Iowa, Alan served as primary financial architect for hundreds of startup businesses—guiding clients through early formation, venture scaling, and ultimate nine-figure corporate acquisitions.
✦ Big Seven Forensic Due Diligence
Alan's background at Laventhol & Horwath in Washington, D.C. provided extensive experience in capital market audits, forensic examination of financial statements, and rigorous transaction defense.
✦ Zero Delegated Work
In middle-market M&A, large accounting firms often assign transaction modeling to inexperienced associates. At Alan Balmer, PC, every scenario is modeled and negotiated directly by Alan Balmer.
Frequently Asked Questions.
Clear, definitive answers to common strategic questions regarding this practice area.
Why does a buyer almost always demand an asset purchase?
What is IRS Section 1060 and why does it matter?
Can I use Section 1202 Qualified Small Business Stock (QSBS) to eliminate taxes?
What is an installment sale and how does it save taxes?
When should I involve Alan in the sale process?
All advisory modeling, election filings, and structural recommendations in this practice area adhere strictly to the Internal Revenue Code, Treasury Regulations, and relevant state statutory codes:
- § Internal Revenue Code § 1060 (Special Allocation Rules for Certain Asset Acquisitions)
- § Internal Revenue Code § 1202 (Qualified Small Business Stock Exclusion)
- § Internal Revenue Code § 453 (Installment Method)
- § Internal Revenue Code § 338(h)(10) (Elective Asset Sale Treatment for Stock Purchases)
- § Treasury Regulation § 1.1060-1 (Allocation Rules for Applicable Asset Acquisitions)
- § IRS Form 8594 (Asset Acquisition Statement Under Section 1060)
Ready to Discuss Your Tax Strategy?
Consultations are complimentary and scheduled directly with Alan Balmer, CPA following an initial direct review to confirm mutual fit.